Yogurt family builds franchise empire

Michael and Aaron Serruya first caught wind of the frozen yogurt craze during a Florida holiday. The brothers figured it would be a winner in Toronto, and opened their first Yogen Früz outlet in a mall in 1986, dreaming that one day they'd expand it into

The Financial Post
September 26, 2001

Yogurt family builds franchise empire
Early risks paid off
Hollie Shaw

Michael and Aaron Serruya first caught wind of the frozen yogurt craze during a Florida holiday. The brothers figured it would be a winner in Toronto, and opened their first Yogen Früz outlet in a mall in 1986, dreaming that one day they'd expand it into a chain with as many as 10 outlets.

Today, the Markham, Ont.-based company, now known as CoolBrands International Inc., has grown into the world's largest franchisor of frozen yogurt, a publicly traded entity with close to 5,000 franchised outlets and estimated sales this year of $175-million.

That success is due largely to risks the brothers took in the early 1990s, particularly a decision to take the company beyond North America and into some of the hottest countries in the world.

Now, Yogen Früz sells branded treats in more than 80 countries, everywhere from Thailand to the Stalinist enclave of North Korea.

Throughout, the enterprise has remained a family affair, despite the incursion of outside executives last year: president David Stein now shares chief executive duties with Richard Smith. Michael Serruya acts as co-chairman and Aaron is executive vice-president. Brothers Simon and Jack have also worked for the company.

The Serruyas have said their success in the tough international marketplace came from understanding and researching the individual markets they planned to enter. Flavours popular in South America, such as guava, might not even be introduced in Canada or the United States.

CoolBrands also manufactures and distributes a host of frozen juice bars and desserts to grocery and convenience chains under the brands Tropicana, Weight Watchers, Yoplait, Pez, YooHoo, Welch's and Betty Crocker.

Last year, it scooped up U.S.-based Eskimo Pie Corp. in a deal worth US$35.7-million, an acquisition that more than doubled the size of its consumer products business in the United States.

In addition to more than 4,500 Yogen Früz outlets, CoolBrands franchises and licenses 350 gourmet coffee shop outlets under the name Java Coast Fine Coffees.

The company's steadily improving financial performance during the last year has put it on the radar screens of financial analysts, always in search of a small-cap bargain with great growth prospects. "Financially speaking, the company has $22-million in cash on the balance sheet and not a lot of debt, which gives them a lot of financial flexibility," said Jamie Spreng, a retail analyst with Canaccord Capital Corp. in Montreal.

In its third quarter ended May 31, CoolBrands saw its net earnings jump 159% to $3.7-million. Revenue rose 91%, to $54.9-million.

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